Lulu Retail announces IPO offer price and opens subscription

Lulu Retail Holdings, the largest pan-GCC full-line retailer, set its initial public offering (IPO) share price range between AED 1.94 and AED 2.04, which places the company's market value between AED 20.04 billion and AED 21.07 billion, according to a press release.

The subscription period for this IPO began on Monday and will close on Tuesday, November 5, 2024, offering shares to both retail and institutional investors across the UAE, the press release stated.

Lulu is offering over 2.582 billion shares, representing 25% of its total issued shares, through a three-part structure aimed at UAE retail investors (including eligible group employees), professional investors, and senior executives.

Chief Executive Officer of Lulu Retail Saifee Rupawala stated: “Today marks another significant milestone as we open subscriptions for the Lulu Retail IPO. Our offering presents a unique opportunity for local and international investors to participate in the growth of the largest pan-GCC retailer by market share and the fastest-growing player of scale in the Kingdom of Saudi Arabia."

He added that more than 600,000 people shop with Lulu every day and he expects "continued strong macroeconomic growth across our six markets driven by favourable demographic and consumption trends..."

Dividend and listing details

Lulu has committed to a dividend payout ratio of 75% of its annual distributable profits post-tax, to be distributed semi-annually, according to the press release.

The company also announced a dividend for the period ending December 31, 2024, scheduled for distribution in the first half of 2025. Lulu's shares are expected to start trading on the Abu Dhabi Securities Exchange around November 14, 2024.

Tranche breakdown and subscription guidelines

First tranche (retail investors and employees): A total of 258.222 million shares (10% of the offering) are available with a minimum subscription size of AED 5,000. Eligible employees will have a guaranteed allocation of 2,000 shares, while other subscribers are assured a minimum of 1,000 shares.

Second tranche (institutional investors): Lulu aims to offer 2.298 billion shares (89% of the offering) to institutional investors with a minimum application of AED 5 million.

Third tranche (senior executives): This tranche offers 25.822 million shares (1% of the offering) to senior executives, with a minimum subscription amount of AED 50,000.

For retail investors, subscribing is available through several UAE banks, including Abu Dhabi Commercial Bank, First Abu Dhabi, Dubai Islamic Bank, Emirates Islamic Bank, Mashreq, and Emirates NBD. Institutional investors in the second tranche have no maximum subscription limit, while senior executives can subscribe in increments of AED 1,000.

Cornerstone investors secure significant stake in Lulu Retail's IPO

As part of its IPO process, Lulu Retail has signed agreements with prominent cornerstone investors, securing a substantial commitment of approximately AED 753 million ($205 million) from four key institutions.

These cornerstone investors include the Abu Dhabi Pension Fund (ADPF), Bahrain Mumtalakat Holding Company (Mumtalakat), Emirates International Investment Company (EIIC), and the Oman Investment Authority (OIA), according to the press release.

Each investor has independently committed to purchasing shares at the offer price within the Qualified Investor Offering. Notably, these shares will be subject to a 180-day lock-up period post-listing, ensuring a strong, stable foundation for the IPO launch.

The Abu Dhabi Pension Fund, founded in 2000, oversees contributions, pensions, and benefits for UAE nationals in the public and private sectors of Abu Dhabi, playing a vital role in the financial security of Emirati employees and retirees.

Mumtalakat, Bahrain's sovereign wealth fund, operates with a diverse portfolio across numerous sectors, enhancing Bahrain's economic stability through long-term investments.

EIIC, an Abu Dhabi-based investment vehicle under National Holding, boasts a track record of impactful investments across MENA and international markets, with notable stakes in entities like Abu Dhabi Islamic Bank and Modon Holding.

Oman’s sovereign investment arm, the Oman Investment Authority, established by Royal Decree, actively manages the Sultanate’s financial assets and investments.

Subscription process for local and international investors

According to the release, GCC residents and Indian investors can participate in Lulu’s IPO, with applications facilitated by brokers and banks in the UAE.

Investors are required to hold a National Investor Number (NIN), which can be obtained through local brokerages.

UAE brokerages provide guidelines for international investors on how to apply for a NIN and participate in the IPO, ensuring KYC (Know Your Customer) compliance.